Correlation Between NEW MILLENNIUM and MAGIC SOFTWARE
Can any of the company-specific risk be diversified away by investing in both NEW MILLENNIUM and MAGIC SOFTWARE at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining NEW MILLENNIUM and MAGIC SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEW MILLENNIUM IRON and MAGIC SOFTWARE ENTR, you can compare the effects of market volatilities on NEW MILLENNIUM and MAGIC SOFTWARE and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in NEW MILLENNIUM with a short position of MAGIC SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEW MILLENNIUM and MAGIC SOFTWARE.
Diversification Opportunities for NEW MILLENNIUM and MAGIC SOFTWARE
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NEW and MAGIC is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding NEW MILLENNIUM IRON and MAGIC SOFTWARE ENTR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAGIC SOFTWARE ENTR and NEW MILLENNIUM is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on NEW MILLENNIUM IRON are associated (or correlated) with MAGIC SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAGIC SOFTWARE ENTR has no effect on the direction of NEW MILLENNIUM i.e., NEW MILLENNIUM and MAGIC SOFTWARE go up and down completely randomly.
Pair Corralation between NEW MILLENNIUM and MAGIC SOFTWARE
Assuming the 90 days trading horizon NEW MILLENNIUM IRON is expected to generate 3.51 times more return on investment than MAGIC SOFTWARE. However, NEW MILLENNIUM is 3.51 times more volatile than MAGIC SOFTWARE ENTR. It trades about 0.05 of its potential returns per unit of risk. MAGIC SOFTWARE ENTR is currently generating about 0.0 per unit of risk. If you would invest 201.00 in NEW MILLENNIUM IRON on October 24, 2024 and sell it today you would earn a total of 554.00 from holding NEW MILLENNIUM IRON or generate 275.62% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 99.8% |
Values | Daily Returns |
NEW MILLENNIUM IRON vs. MAGIC SOFTWARE ENTR
Performance |
Timeline |
NEW MILLENNIUM IRON |
MAGIC SOFTWARE ENTR |
NEW MILLENNIUM and MAGIC SOFTWARE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NEW MILLENNIUM and MAGIC SOFTWARE
The main advantage of trading using opposite NEW MILLENNIUM and MAGIC SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEW MILLENNIUM position performs unexpectedly, MAGIC SOFTWARE can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in MAGIC SOFTWARE will offset losses from the drop in MAGIC SOFTWARE's long position.NEW MILLENNIUM vs. AOYAMA TRADING | NEW MILLENNIUM vs. New Residential Investment | NEW MILLENNIUM vs. OFFICE DEPOT | NEW MILLENNIUM vs. FIRST SAVINGS FINL |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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